Furniture Orders Up Slightly in July

September 29, 2010  by in UnCategorized   

By Home Furnishings Business in economic news on September 30, 2010

New orders for furniture from furniture retailers crept up 3 percent in July 2010, compared with the same month a year ago.

That's according to the latest Furniture Insights survey of residential furniture manufacturers and distributors from the High Point accounting and consulting firm Smith Leonard.

While orders rose in July, the industry still has a lot of ground to recover. New orders in July 2009 were off 16 percent from July 2008; and July 2008 orders were off 17 percent from July 2007. This July 2010 increase was smallest increase since orders were flat in October 2009 compared with October 2008.

Through July, new orders increased 9 percent over last year, down from 10 percent last month. Last year, the first seven months were off 20 percent from 2008.
 
July shipments rose 15 percent over July 2009, once again eating into backlogs. Shipments were off 16 percent from June, but Smith Leonard Managing Partner Ken Smith noted that most companies take at least one week off in July. Shipments are now up 8 percent year-to-date, up from 7 percent last month. At this time last year, shipments were off 20 percent from 2008.

Backlogs were 27 percent above last year, down from a 35 percent increase reported last month, as shipments exceeded new orders.

Receivables rose 12 percent over July 2009 levels, somewhat in line with the 15 percent increase in shipments over last year. But receivables fell only 3 percent from June, while shipments were off 16 percent from June.

"We hope that is timing, as most of July shipments would have been made in the latter part of July with payments made in August," Smith said.

Inventories rose 4 percent in July from June levels, when they were up 5 percent over May. Inventories are now up 6 percent over July 2009, up from a 2 percent increase last month.
 
The number of furniture factory and warehouse employees increased 3 percent over July 2009, up from a 2 percent increase last month. July results were about even with June levels. Factory and warehouse payrolls rose 17 percent from last July, about the same increase as last month. Last year, factory and warehouse payrolls were down 17 percent from July 2008. Year-to-date, payrolls are up 12 percent over last year, again about the same as reported last month.

"The results for July orders were somewhat disappointing, though really not unexpected based on our conversations with those in the industry," Smith said in his summary."The good news is, there was continued improvement in orders, albeit a smaller increase. Shipments on the other hand were good, which will eventually help cash flow.

"The changes among participants continue to be widespread with some reporting significant double digit improvements, while others report significant declines. We expect any given month can produce widespread differences. Overall though, with about two-thirds of the participants up for the year, that is not a bad thing considering how bad 2008 and 2009 were."

Smith doesn't expect much improvement when August numbers come in, and said conversations on September have been "mixed."

"We continue to hear of good weeks and bad weeks, with little concentrated traction," he said. "We were talking with someone a week or two ago discussing the industry and the decline in shipments. One of the things we wondered was the impact of declining prices of furniture on the statistics. A few years ago, that dining room suite that sold at wholesale for $2,000 now is imported and sold at $800. Those kinds of comparisons really have an impact on the industry numbers. We have always wished we could get a comparison of units sold, but that information is not available as far as we know. Mainly because there is no real definition of what a unit is."

Smith noted that Pre-Market was well attended and the mood was very good.